STOCKHOLDERS' AGREEMENT
by and among
▇▇▇ ▇▇▇▇,
VARIOUS ▇▇▇▇▇▇▇▇▇ ENTITIES AND INDIVIDUALS,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ T.A.,
THE ▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ FOUNDATION INC.,
OBJECT TRADING CORP.,
ZIB INC.,
VARIOUS SECURED LENDERS,
and
TOY BIZ, INC.
Dated as of October 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1. Definitions.........................................3
ARTICLE II MANAGEMENT
Section 2.1. Board Representation................................7
Section 2.2. Loss of Board Representation.......................12
Section 2.3. Committee Representation...........................15
Section 2.4. Computation and Notice of Common Equivalent
Shares Ownership...................................19
Section 2.5. Restriction on Disposition of Stock Held by
Subsidiary.........................................21
ARTICLE III REPRESENTATIONS
Section 3.1. Representations of the ▇▇▇▇▇▇▇▇▇ Entities..........22
Section 3.2. Representations of the ▇▇▇▇▇▇▇▇▇▇/Arad Group.......22
Section 3.3. Representations of the Lender Group................22
ARTICLE IV MISCELLANEOUS
Section 4.1. Effective Date.....................................23
Section 4.2. Termination........................................23
Section 4.3. Secretary to Retain Copy...........................25
Section 4.4. Further Actions....................................25
Section 4.5. Specific Performance...............................25
Section 4.6. Entire Agreement...................................26
Section 4.7. Notices............................................26
Section 4.8. Waivers; Amendment.................................29
Section 4.9. Binding Effect; Heirs and Successors...............29
Section 4.10. No Third Party Beneficiaries.......................30
Section 4.11. Separability.......................................30
Section 4.12. Headings...........................................30
Section 4.13. Pronouns...........................................30
Section 4.14. Counterparts.......................................30
Section 4.15. Governing Law......................................30
Section 4.16. No Restriction on Transferability..................31
Section 4.17. Whippoorwill Obligations Several and Not Joint.....31
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of
October 1, 1998 among ▇▇▇ ▇▇▇▇ ("Arad"); the various ▇▇▇▇▇▇▇▇▇ entities and
individuals listed on the signature pages hereto (the "▇▇▇▇▇▇▇▇▇ Entities");
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"); ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ T.A., a Florida trust (the
"Trust"); the ▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Foundation Inc., a Florida corporation
(the "Foundation"); Object Trading Corp., a Delaware corporation ("Object
Trading"); Zib Inc., a Delaware corporation ("Zib" and together with ▇▇▇▇▇▇▇▇▇▇,
the Trust, the Foundation, and Object Trading, the "▇▇▇▇▇▇▇▇▇▇ Entities"; the
▇▇▇▇▇▇▇▇▇▇ Entities together with Arad, the "▇▇▇▇▇▇▇▇▇▇/Arad Group"; the
▇▇▇▇▇▇▇▇▇▇/Arad Group together with the ▇▇▇▇▇▇▇▇▇ Entities, the "Investor
Group"); The Chase Manhattan Bank ("Chase"); ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇");
Whippoorwill Associates, Incorporated, as agent for or general partner of each
institution (a "Whippoorwill Account") set forth on Schedule 1 (collectively,
"Whippoorwill"); and Toy Biz, Inc., a Delaware corporation (the "Company"). Each
of ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and each Whippoorwill Account shall be a "Secured
Lender" for so long as each remains bound hereby, and all Secured Lenders bound
hereby shall collectively constitute, the "Lender Group"). The Secured Lenders
are some of the "Secured Lenders" referred to in the Fourth Amended Joint Plan
of Reorganization Proposed by those "Secured Lenders" and the Company in the
bankruptcy matter of In Re: Marvel Entertainment Group, Inc. et al (case No.
97-638-RRM) in the United States District Court for the District of Delaware
(the "Plan"); and all of the "Secured Lenders" as that term is defined more
broadly in the Plan (other than any ▇▇▇▇▇▇▇▇▇ Entity or any of its Affiliates)
are referred to in this Agreement collectively as the "Plan Secured Lender
Group".
W I T N E S S E T H
WHEREAS, the ▇▇▇▇▇▇▇▇▇▇ Entities, Arad and the ▇▇▇▇▇▇▇▇▇
Entities will own shares of common stock, par value $.01 per share, of the
Company (the "Common Stock"), and the ▇▇▇▇▇▇▇▇▇▇ Entities and the ▇▇▇▇▇▇▇▇▇
Entities will own shares of 8% Cumulative Convertible Exchangeable Preferred
Stock of the Company (the "Preferred Stock"; together with the Common Stock and
any other security of the Company which is then currently convertible or
exchangeable for Common Stock without the payment of additional consideration,
the "Capital Stock"), immediately after the consummation of the Plan;
WHEREAS, immediately after the consummation of the Plan, the
Secured Lenders will own shares of Common Stock and Preferred Stock;
WHEREAS, pursuant to the Plan, the Board of Directors of the
Company (the "Board") shall consist of eleven (11) Directors, six (6) of whom,
subject to Section 2.2 hereof, are to be designated by the Investor Group (the
"Investor Group Designees"), and five (5) of whom, subject to Section 2.2
hereof, are to be designated by the Lender Group (the "Lender Group Designees");
provided, that unless and until the occurrence of a ▇▇▇▇▇▇▇▇▇ Forfeiture Event,
one (1) of the Investor Group Designees is to be designated by the ▇▇▇▇▇▇▇▇▇
Entities (the "▇▇▇▇▇▇▇▇▇ Designee");
WHEREAS, each of the parties hereto desires to enter into this
Agreement in order to set forth certain provisions regarding the management of
the Company.
2
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Affiliate" and "Affiliated" shall have the meanings set forth in Rule
12b-2 of the Securities Exchange Act of 1934, as amended, and any successor
regulation thereto.
"Agreement" shall have the meaning set forth in the Preamble hereto.
"Arad" shall have the meaning set forth in the Preamble hereto.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, and any successor regulation
thereto; provided that, a person shall not be deemed to be a Beneficial Owner of
a security merely because that person has the right to acquire Beneficial
Ownership of that security if that right may be exercised only upon the payment
of consideration (other than solely by conversion or exchange of Capital Stock)
nor shall a person be deemed to be a Beneficial Owner of a security merely
because of the provisions of this Agreement. For the purposes of this
definition, "Beneficial Ownership" and "Beneficially Own" shall refer to the
ownership interest of a Beneficial Owner. With respect to Whippoorwill,
"Beneficially Owned" shall mean only such Capital Stock Beneficially Owned by
Whippoorwill Accounts with respect to which Whippoorwill
3
Associates, Incorporated has the power to direct the vote.
"Board" shall have the meaning set forth in the Preamble hereto.
"Capital Stock" shall have the meaning set forth in the Recitals
hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Equivalent Shares" Beneficially Owned by any person shall mean
the number of shares of Common Stock Beneficially Owned by such person.
"Common Stock" shall have the meaning set forth in the Recitals hereto,
together with any other security of the Company for which the Common Stock shall
have been exchanged in any recapitalization or similar transaction.
"Designee" and "Designees" shall have the meaning set forth in Section
2.1(a) hereof.
"▇▇▇▇▇▇▇▇▇ Designator" shall mean ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or, upon the death or
other incapacity of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or, upon the death or other
incapacity of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, such other person identified by ▇▇▇▇▇▇▇▇▇
Partners Inc. by written notice to the Secretary of the Company.
"▇▇▇▇▇▇▇▇▇ Designee" shall have the meaning set forth in the Recitals
hereto.
"▇▇▇▇▇▇▇▇▇ Entities" shall have the meaning set forth in the Preamble
hereto.
"▇▇▇▇▇▇▇▇▇ Forfeiture Event" shall mean a decrease in the ▇▇▇▇▇▇▇▇▇
Entities' Beneficial Ownership of Capital Stock to less than 1,500,000 Common
Equivalent Shares, calculated in accordance with Section 2.4 hereof and
appropriately adjusted for any stock splits, reverse stock splits,
recapitalization of the Capital Stock or capital transaction of a similar
nature.
4
"Director" shall mean a member of the Board of Directors of the
Company.
"Effective Date" shall mean the date on which the Agreement becomes
effective in accordance with Section 4.1 hereof.
"Election Meeting" shall have the meaning set forth in Section 2.1(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Independent Director" shall mean either Investor Group Designees or
Lender Group Designees who satisfy the requirements of Paragraph 303.00 of the
New York Stock Exchange Listed Company Manual (or any successor provision) and
who are (a) "non-employee directors" or any related successor concepts under
Rule 16b-3 (or any successor provision) promulgated pursuant to Section 16 of
the Exchange Act, and (b) "outside directors" or any related successor concepts
under Section 162(m) (or any successor provision) of the Code.
"Investor Group" shall have the meaning set forth in the Recitals
hereto.
"Investor Group Designator" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ until his
death, disability or resignation. The person serving at any time as Investor
Group Designator shall have the right to appoint (or to change), by written
notice to the Secretary of the Company, a successor Investor Group Designator
who shall become the Investor Group Designator upon the death, disability, or
resignation of the Investor Group Designator.
"Investor Group Designee" shall have the meaning set forth in the
Recitals hereto.
"Lender Group" shall have the meaning set forth in the Preamble hereto.
"Lender Group Designator" shall mean (i) with respect to the initial
configuration of the Board following the Effective Time, a subcommittee of the
Lender Group consisting of
5
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Whippoorwill, and (ii) thereafter, any one or more
Secured Lenders that Beneficially Own a majority of the Common Equivalent Shares
Beneficially Owned by the Lender Group; provided however that, whenever the
Company is required to deliver a notice under this Agreement to the Lender Group
Designator, such notice shall be delivered to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
shall promptly deliver a copy thereof to each other Secured Lender still bound
hereby.
"Lender Group Designee" shall have the meaning set forth in the
Preamble hereto.
"Notice of Designee" shall have the meaning set forth in Section 2.1(b)
hereof.
"▇▇▇▇▇▇▇▇▇▇ Entities" shall have the meaning set forth in the Preamble
hereto.
"▇▇▇▇▇▇▇▇▇▇/Arad Group" shall have the meaning set forth in the
Preamble hereto.
"Plan" shall have the meaning set forth in the Recitals hereto.
"Plan Secured Lender Group" shall have the meaning set forth in the
Preamble hereto.
"Preferred Stock" shall have the meaning set forth in the Recitals
hereto, together with any other security of the Company for which the Preferred
Stock shall have been exchanged in any recapitalization or similar transaction.
"Secured Lenders" shall have the meaning set forth in the Preamble
hereto.
"Stockholder Group Designators" shall mean the Investor Group
Designator, the Lender Group Designator and the ▇▇▇▇▇▇▇▇▇ Designator.
"Stockholder Groups" shall mean the Investor Group, the Lender Group
and the ▇▇▇▇▇▇▇▇▇ Entities.
6
"Whippoorwill Account" shall have the meaning set forth in the
Preamble.
ARTICLE II
MANAGEMENT
Section 2.1. Board Representation.
(a) Subject to Section 2.2 hereof, at and following the
Effective Date, each party to this agreement will take such action as may
reasonably be in its power to cause the Board to include (i) six (6) Investor
Group Designees, one (1) of whom, unless and until a ▇▇▇▇▇▇▇▇▇ Forfeiture Event
has occurred, shall be the ▇▇▇▇▇▇▇▇▇ Designee, and (ii) five (5) Lender Group
Designees. The Investor Group Designees (including the ▇▇▇▇▇▇▇▇▇ Designee) and
the Lender Group Designees are sometimes collectively referred to herein as the
"Designees" and individually as a "Designee."
(b)
(i) The Investor Group Designator, the Lender Group
Designator and the ▇▇▇▇▇▇▇▇▇ Designator shall each give the Company
timely notice (the "Notice of Designee") of the name of each person
whom the relevant Stockholder Group wishes to be nominated by the
Company for election or re-election to the Board at the next meeting of
stockholders, or taking of action by written consent of stockholders,
at which Directors are to be elected (an "Election Meeting"). At the
option of any Stockholder Group Designator, the Notice of Designee may
also specify one or more alternates (an "Alternate Designee") to serve
in the event of the incapacity or other inability to serve of a
Designee, as provided herein. The Investor Group Designees and
7
the Lender Group Designees shall at all times include such number of
Independent Directors as shall be required to comply with the
provisions of Sections 2.3(b) and 2.3(c) hereof. Each Notice of
Designee shall be in writing and shall be timely if delivered to the
Secretary of the Company at the Company's principal executive offices
not later than the close of business on the 60th day prior to the first
anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the Election Meeting is more than 30
days before or after such anniversary date, the Notice of Designee to
be timely must be so delivered not later than the later of (x) the
close of business on the later of the 60th day prior to the Election
Meeting and (y) the 20th day following the day on which public
announcement of the date of the Election Meeting is first made by the
Company. In no event shall the public announcement of an adjournment of
an Election Meeting commence a new time period for the giving of the
Notice of Designee as described above. If the Company has not received
a Notice of Designee from any Stockholder Group Designator at a time
when the relevant Stockholder Group is entitled to name one or more
Designee on or before the 10th day before the latest date for delivery
of the Notice of Designee specified in the proviso to the next
preceding sentence, the Company shall so inform the relevant
Stockholder Group Designator by written notice. If the Company has not
received a Notice of Designee from any Stockholder Group Designator at
a time when the relevant Stockholder Group is entitled to name one or
more Designee on or before the latest date for delivery of such Notice,
then such Stockholder Group Designator shall be deemed
8
to have delivered on such date a Notice of Designee designating the
Designees specified in the most recently delivered Notice of Designee
for any prior Election Meeting, or, if any such Designee is unable to
serve and an Alternate Designee has been specified therefor, such
Alternate Designee.
(ii) By means of written notice given to a Stockholder
Group Designator within ten days of the Company's receipt of a Notice
of Designee sent by that Stockholder Group Designator, the Board may
reject a Designee if, in the exercise of its fiduciary duties, it
reasonably determines that such Designee fails to meet the moral or
professional standards required of a director of a public corporation
such as the Company. The Company's notice of rejection shall specify
the basis for such rejection in accordance with this subsection in
reasonable detail. If the Board shall reject any Designee as aforesaid,
the relevant Stockholder Group Designator may send a supplemental
Notice of Designee designating a replacement for the rejected Designee,
which notice shall be timely if received by the Company within fifteen
days of that Stockholder Group Designator's receipt of a notice of
rejection under the first sentence of this paragraph. If the
Stockholder Group Designator does not send a supplemental Notice of
Designee within the aforesaid time period and an Alternate Designee was
designated for the rejected Designee in the original Notice of
Designee, the Alternate Designee, unless rejected in accordance with
this subsection, shall be deemed nominated by the Stockholder Group
Designator in replacement of the rejected Designee.
9
(iii) Each Notice of Designee shall set forth, as to each
person whom the Stockholder Group wishes the Company to nominate for
election or re-election as a Director, all information relating to such
person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act and Rule
14a-11 thereunder (including such person's written consent to being
named in the proxy statement as a nominee and to serving as a Director
if elected); provided, however, that a Notice of Designee shall not be
deemed defective for failure to supply such information unless, after
request therefor by the Company to the relevant Stockholder Group
Designator, such Stockholder Group Designator fails to supply such
information on a timely basis for inclusion in the proxy materials for
the relevant Election Meeting.
(iv) If the parties to this Agreement have received
notice from the Company that there are any directorships to be filled
at a forthcoming Election Meeting as to which no timely Notice of
Designee was received or deemed received, the parties to this Agreement
may vote their shares as to those directorships without constraint by
this Agreement.
(c) The Company shall nominate and recommend those Designees
as to whom it has received or is deemed to have received a timely Notice of
Designee to the stockholders of the Company for election or re-election as
Directors and shall otherwise use its best efforts to cause those Designees to
be elected to the Board. Each party to this Agreement agrees to vote, or cause
to be voted, all of the shares of Capital Stock Beneficially Owned by it
10
at any Election Meeting and agrees to take all actions otherwise reasonably in
its power as a stockholder of the Company to cause the Investor Group Designees
(including, in the absence of a ▇▇▇▇▇▇▇▇▇ Forfeiture Event, the ▇▇▇▇▇▇▇▇▇
Designee) and the Lender Group Designees to be elected to the Board as described
herein.
(d)
(i) If, following his election to the Board, a Lender
Group Designee shall vacate his position on the Board for any reason,
including, but not limited to, the death, removal or retirement of that
Designee, but excluding any changes in Board representation pursuant to
Section 2.2 hereof, then the Lender Group Designator shall have the
right to nominate a successor Designee to fill the vacancy.
(ii) If, following his election to the Board, the
▇▇▇▇▇▇▇▇▇ Designee shall vacate his position on the Board for any
reason, including, but not limited to, the death, removal or retirement
of that Designee, but excluding any changes in Board representation
pursuant to Section 2.2 hereof, then the ▇▇▇▇▇▇▇▇▇ Designator shall
have the right to nominate a successor Designee to fill the vacancy.
(iii) If, following his election to the Board, an Investor
Group Designee shall vacate his position on the Board for any reason,
including, but not limited to, the death, removal or retirement of that
Designee, or the occurrence of a ▇▇▇▇▇▇▇▇▇ Forfeiture Event, but
excluding any other changes in Board representation pursuant to Section
2.2 hereof, then the Investor Group Designator, except in cases covered
by Section 2.1(d)(ii), shall have the right to nominate a successor
Designee to
11
fill the vacancy.
(iv) The Company shall cause any successor Designee
nominated pursuant to Section 2.1(d)(i)-(iii) (a "Nominated Successor")
to be elected to fill such vacancy as promptly as practicable at a
special meeting of the Board called for that purpose or by action of
the Board by unanimous written consent. If for any reason the Nominated
Successor is not made a Director as aforesaid, the parties hereto shall
promptly use their respective best efforts (i) to bring about a special
meeting of stockholders for the purpose of (A) removing from the Board
any Director appointed instead of the Nominated Successor and/or (B)
electing the Nominated Successor to the Board or (ii) to execute a
written consent in lieu of a meeting of stockholders (A) to remove from
the Board any Director appointed instead of the Nominated Successor
and/or (B) to elect the Nominated Successor to the Board.
(e) Each Stockholder Group Designator shall have the right, at
any time, to identify any of that Stockholder Group's Designees whom that
Stockholder Group wishes to have removed from his position on the Board and to
nominate a successor Designee to fill the resulting vacancy. The parties hereto
shall promptly use their respective best efforts (i) to bring about a special
meeting of stockholders, and each shall vote, or cause to be voted, all of the
shares of Capital Stock Beneficially Owned by it at that meeting, for the
purpose of removing from the Board any such Designee(s) so identified and
electing the nominated successor(s) to the Board or (ii) to execute a written
consent in lieu of a meeting of stockholders to remove from the Board any such
Designees so identified and to elect the
12
nominated successor(s) to the Board.
(f) The parties to this Agreement shall not, and shall use
their best efforts to cause their respective Designees not to, take any action
to change from eleven (11) the number of Directors which shall constitute the
entire Board without the unanimous written agreement of the Investor Group
Designator, the Lender Group Designator and, unless and until a ▇▇▇▇▇▇▇▇▇
Forfeiture Event has occurred, the ▇▇▇▇▇▇▇▇▇ Designator.
Section 2.2. Loss of Board Representation.
(a) Decreases in Beneficial Ownership of Capital Stock
(including decreases occurring prior to the expiration of twenty-one months
after the date of the consummation of the Plan) shall cause decreases in the
Stockholder Groups' right to designate Directors, and shall cause forfeitures of
Board seats, in accordance with this Section 2.2(a); provided, that such
decreases in Stockholder Groups' right to designate Directors, and such
forfeitures of Board seats, shall take effect on the first day after the
expiration of twenty-one months after the consummation of the Plan and not
before. For purposes of this Section 2.2 and Section 2.3(e) hereof, the parties
have agreed that such decreases in the Beneficial Ownership of Capital Stock of
the Plan Secured Lender Group in the aggregate shall cause such decreases in the
Lender Group's right to designate Directors and such forfeitures of Board seats
as provided in those sections.
(i) If either the Investor Group or the Plan Secured
Lender Group, as the case may be, shall decrease its Beneficial
Ownership of Common Equivalent Shares at least twenty percent (20%),
but less than forty percent (40%), then the Investor Group
13
or the Lender Group, as the case may be, shall forfeit one (1) Board
seat.
(ii) If either the Investor Group or the Plan Secured
Lender Group, as the case may be, shall decrease its Beneficial
Ownership of Common Equivalent Shares at least forty percent (40%), but
less than sixty percent (60%), then the Investor Group or the Lender
Group, as the case may be, shall forfeit two (2) Board seats.
(iii) If either the Investor Group or the Plan Secured
Lender Group, as the case may be, shall decrease its Beneficial
Ownership of Common Equivalent Shares at least sixty percent (60%), but
less than eighty percent (80%), then the Investor Group or the Lender
Group, as the case may be, shall forfeit three (3) Board seats.
(iv) If either the Investor Group or the Plan Secured
Lender Group, as the case may be, shall decrease its Beneficial
Ownership of Common Equivalent Shares at least eighty percent (80%),
but less than ninety percent (90%), then the Investor Group or the
Lender Group, as the case may be, shall forfeit four (4) Board seats.
(v) (A) If the Investor Group shall decrease its
Beneficial Ownership of Common Equivalent Shares at least ninety
percent (90%), but less than ninety-five percent (95%), then the
Investor Group shall forfeit five (5) Board seats, and (B) if the Plan
Secured Lender Group shall decrease its Beneficial Ownership of Common
Equivalent Shares at least ninety percent (90%), then the Lender Group
shall forfeit all five (5) of its Board seats.
(vi) Upon the occurrence of a ▇▇▇▇▇▇▇▇▇ Forfeiture Event,
the ▇▇▇▇▇▇▇▇▇ Entities shall forfeit their one (1) Board seat, but that
forfeiture shall not cause a
14
reduction in the number of Directors which the Investor Group has the
right to designate unless the Investor Group shall have decreased its
Beneficial Ownership of Common Equivalent Shares at least ninety-five
percent (95%), in which case the Investor Group shall forfeit all six
(6) of its Board seats. If a ▇▇▇▇▇▇▇▇▇ Forfeiture Event has not
occurred, none of the Board seats forfeited by the Investor Group under
Section 2.2(a)(i)-(v) shall be the Board seat of the ▇▇▇▇▇▇▇▇▇
Designee.
(b) In the event of a decrease in Beneficial Ownership that
decreases a Stockholder Group's right to name Directors under Section 2.2(a)
hereof, that Stockholder Group's Designator shall name the Designee(s) to be
removed from the Board in accordance with that section and the parties to this
Agreement shall use their respective best efforts to cause the resignations from
the Board of any Designee(s) so named. If the number of Designees of a
Stockholder Group serving on the Board is not promptly decreased in accordance
with Section 2.2(a) hereof, the parties hereto shall promptly use their
respective best efforts (i) to bring about a special meeting of stockholders,
and each shall vote, or cause to be voted, all of the shares of Capital Stock
Beneficially Owned by it at that meeting, for the purpose of removing from the
Board such number of the Designees of that Stockholder Group as shall be
required in order to comply with Section 2.2(a) or (ii) to execute a written
consent in lieu of a meeting of stockholders to remove from the Board such
number of Designees of that Stockholder Group.
15
Section 2.3. Committee Representation.
(a) Each party to this Agreement shall vote, or cause to be
voted, its Capital Stock Beneficially Owned, and shall use its best efforts to
cause its respective Stockholder Group's Designees on the Board, subject to the
exercise of their fiduciary obligations, to establish the following committees
of the Board and to cause those committees of the Board to be comprised and have
the functions, powers and authorizations, as set forth below.
(b) The Audit Committee shall consist of five (5) Independent
Directors, three (3) of whom will be Lender Group Designees named by a majority
of the Lender Group Designees then serving on the Board and two (2) of whom will
be Investor Group Designees named by a majority of the Investor Group Designees
then serving on the Board. The Audit Committee shall exercise, subject to
applicable provisions of laws, the functions regularly administered by
committees of such type including, without limitation, (A) to review the
professional services and independence of the Company's independent auditors and
the scope of the annual external audit as recommended by the independent
auditors, (B) to ensure that the scope of the annual external audit by the
independent auditors of the Company is sufficiently comprehensive, (C) to
review, in consultation with the independent auditors and the internal auditors,
the plan and results of the annual external audit, the adequacy of the Company's
internal control systems and the results of the Company's internal audits, (D)
to review with management and the independent auditors, the Company's annual
financial statements, financial reporting practices and the results of each
external audit, and (E) to consider the qualification of the Company's
independent auditors, to make recommendations to the Board as
16
to their selection and to review the relationship between such independent
auditors and management.
(c) The Compensation and Nominating Committee shall consist of
five (5) Directors, two (2) of whom shall be Lender Group Designees named by a
majority of the Lender Group Designees then serving on the Board and three (3)
of whom shall be Investor Group Designees named, subject to the following
sentence, by a majority of the Investor Group Designees then serving on the
Board. Unless a ▇▇▇▇▇▇▇▇▇ Forfeiture Event has occurred, one (1) of the three
Investor Group Designees on the Compensation and Nominating Committee shall be
the ▇▇▇▇▇▇▇▇▇ Designee. At least one of the Lender Group Designees and at least
one of the Investor Group Designees (other than the ▇▇▇▇▇▇▇▇▇ Designee) serving
on the Compensation and Nominating Committee shall be an Independent Director.
The Compensation and Nominating Committee shall exercise, subject to applicable
provisions of law, the functions regularly administered by committees of such
type including, without limitation, the power to review and recommend to the
Board the compensation and benefit arrangements for the officers of the Company,
the administering of the stock option plans and executive compensation programs
of the Company, including bonus and incentive plans applicable to officers and
key employees of the Company and to recommend to the Board nominees for election
as Directors.
(d) The Finance Committee shall consist of five (5) Directors,
two (2) of whom will be Lender Group Designees named by a majority of the Lender
Group Designees then serving on the Board and three (3) of whom will be Investor
Group Designees named by a
17
majority of the Investor Group Designees then serving on the Board. The Finance
Committee shall exercise, subject to applicable provisions of law, the functions
regularly administered by committees of such type including, without limitation,
to make recommendations to the Board with respect to the Company's credit
arrangements, the issuance of equity and long term debt instruments and other
financial matters.
(e)
(i) If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than (33 1/3%), it will
forfeit one Audit Committee Seat. If the Investor Group shall decrease
its Beneficial Ownership of Common Equivalent Shares by more than sixty
six and two thirds percent (66 2/3%), it will forfeit both of its Audit
Committee seats. If the Plan Secured Lender Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than twenty
five percent (25%), the Lender Group will forfeit one Audit Committee
seat. If the Plan Secured Lender Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than fifty percent (50%),
the Lender Group will forfeit two Audit Committee seats. If the Plan
Secured Lender Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than seventy five percent (75%), the Lender
Group will forfeit all three of its Audit Committee seats.
(ii) If the Plan Secured Lender Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than (33
1/3%), the Lender Group will forfeit one Compensation and Nominating
Committee seat. If the Plan Secured
18
Lender Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than sixty six and two thirds percent (66
2/3%), the Lender Group will forfeit both of its Compensation and
Nominating Committee seats. If the Investor Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than twenty
five percent (25%), it will forfeit one Compensation and Nominating
Committee seat. If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than fifty percent (50%),
it will forfeit two Compensation and Nominating Committee seats. If the
Investor Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than seventy five percent (75%) and a
▇▇▇▇▇▇▇▇▇ Forfeiture Event shall have occurred, it will forfeit all
three of its Compensation and Nominating Committee seats. If a
▇▇▇▇▇▇▇▇▇ Forfeiture Event has not occurred, none of the Compensation
and Nominating Committee seats forfeited by the Investor Group under
this Section 2.3(e)(ii) shall be the Compensation and Nominating
Committee seat of the ▇▇▇▇▇▇▇▇▇ Designee.
(iii) If the Plan Secured Lender Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than (33
1/3%), the Lender Group will forfeit one Finance Committee seat. If the
Plan Secured Lender Group shall decrease its Beneficial Ownership of
Common Equivalent Shares by more than sixty six and two thirds percent
(66 2/3%), the Lender Group will forfeit both of its Finance Committee
seats. If the Investor Group shall decrease its Beneficial Ownership of
Common Equivalent Shares by more than twenty five percent (25%), it
will forfeit one
19
Finance Committee seat. If the Investor Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than fifty
percent (50%), it will forfeit two Finance Committee seats. If the
Investor Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than seventy five percent (75%), it will
forfeit all three of its Finance Committee seats.
(f) If a Stockholder Group's right to committee representation
decreases under Section 2.3(e) hereof, each party to this Agreement shall use
its respective best efforts to cause the required number of the Designees of
that Stockholder Group to resign their Committee(s) assignments.
(g) The parties to this Agreement shall not, and shall use
their best efforts to cause their respective Designees not to, take any action
to create any committee of the Board other than as provided in this Agreement
without the unanimous written agreement of the Investor Group Designator, the
Lender Group Designator and, unless and until a ▇▇▇▇▇▇▇▇▇ Forfeiture Event has
occurred, the ▇▇▇▇▇▇▇▇▇ Designator.
Section 2.4. Computation and Notice of Common Equivalent
Shares Ownership.
(a) For the purposes of this Agreement, the Investor Group's
Beneficial Ownership of Common Equivalent Shares shall be determined with
reference only to the ▇▇▇▇▇▇▇▇▇▇/Arad Group's Beneficial Ownership of Common
Equivalent Shares and shall not be determined by reference to, or affected by,
any change in the ▇▇▇▇▇▇▇▇▇ Entities' Beneficial Ownership of Common Equivalent
Shares.
20
(b) For the purposes of Section 2.2 and Section 2.3 hereof, a
group's reduction in its Beneficial Ownership of Common Equivalent Shares shall
be determined by comparing, at any particular time, that group's Beneficial
Ownership of Common Equivalent Shares (including after-acquired Capital Stock)
to that group's Beneficial Ownership of Common Equivalent Shares immediately
following the consummation of the Plan, as adjusted for any stock splits,
reverse stock splits, recapitalization of the Common Equivalent Shares or
capital transaction of a similar nature. Any of the Investor Group, the
▇▇▇▇▇▇▇▇▇ Group, the Lender Group and the Plan Secured Lender Group may use the
Common Equivalent Shares held by Affiliates of its members to calculate its
total Common Equivalent Shares ownership if such Affiliates have agreed in
writing, for the benefit of all parties to this Agreement, to be bound by this
Agreement.
(c) Any reduction in Common Equivalent Shares Beneficially
Owned by any Secured Lender shall constitute a reduction in the number of Common
Equivalent Shares Beneficially Owned by the Plan Secured Lender Group for
purposes of Section 2.2, 2.3 and 4.2(e)(iii) hereof, except to the extent that
(i) any or all of the Common Equivalent Shares no longer so Beneficially Owned
are Beneficially Owned by any member of the Plan Secured Lender Group (or any
Affiliate of such a member) who is, or who agrees to be, bound hereby or (ii)
the Lender Group Designator delivers to the Investor Group Designator, on or
prior to the date on which the Lender Group Designator delivers a Notice of
Designee with respect to an Election Meeting, an irrevocable proxy from one or
more members of the Plan Secured Lender Group (which are not Secured Lenders),
authorizing the Investor Group Designator and
21
the ▇▇▇▇▇▇▇▇▇ Group Designator, acting jointly, to vote a specified number
Common Equivalent Shares Beneficially Owned by such member in the manner
required by this Agreement with respect to the election of directors at such
Election Meeting; provided that even if such an irrevocable proxy has been
delivered this clause (ii) shall not apply with respect to the Common Equivalent
Shares covered thereby with respect to any period after that meeting if such
Common Equivalent Shares fail to be voted in a manner in which such Common
Equivalent Shares would otherwise be required to be voted under this Agreement
if they were Beneficially Owned by a party to this Agreement. For example, (x)
if a Secured Lender sells two million Common Equivalent Shares to a third party
which is not and does not agree to be bound by this Agreement and does not
deliver an irrevocable proxy as provided in the preceding sentence, the number
of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender Group
shall be deemed to have been reduced by two million Common Equivalent Shares,
whether or not offsetting acquisitions of Common Equivalent Shares have been
made by other members of the Plan Secured Lender Group, (y) if, the facts are
the same as in clause (x) but another member of the Plan Secured Lender Group
delivers a proxy described in the preceding sentence and after the meeting to
which the proxy relates the holder of those shares fails to take an action
required by Section 2.1, 2.2 or 2.3 of this Agreement, clause (ii) of Section
2.4(c) shall no longer apply with respect to those shares.
(d) If at any time a Stockholder Group Designator has actual
knowledge (but without any duty of inquiry) that the Beneficial Ownership of
Common Equivalent Shares of the related Stockholder Group (including, for
purposes of the Lender Group Designator, the
22
Plan Secured Lender Group) has been reduced such that such Stockholder Group
would be required to forfeit one or more or any additional Board seats pursuant
to Section 2.2 or Committee seats pursuant to Section 2.3, it shall as promptly
as practicable thereafter notify the Company and the other parties to this
Agreement.
Section 2.5. Restriction on Disposition of Stock Held by
Subsidiary. The parties to this Agreement shall not, and shall use their best
efforts to cause their respective Designees not to, (i) permit Marvel
Characters, Inc. to transfer or otherwise convey any interest in any of the
shares of Common Stock held by Marvel Characters, Inc. unless such transfer or
other conveyance (A) has been approved in writing by a majority in voting power
of each Stockholder Group, or (B) is to the Company, or (ii) allow such shares
of Common Stock to be entitled to vote with respect to matters to be voted upon
or consented to by the stockholders of the Company unless adequate provision is
made to assure that such shares of Common Stock will thereafter be voted, on all
such matters, proportionately with all other outstanding shares of Common Stock
voting on all such matters.
ARTICLE III
REPRESENTATIONS
Section 3.1. Representations of the ▇▇▇▇▇▇▇▇▇ Entities. The
▇▇▇▇▇▇▇▇▇ Entities represent to the other parties to this Agreement that they
will Beneficially Own approximately 6,115,000 Common Equivalent Shares in the
aggregate immediately following the consummation of the Plan.
23
Section 3.2. Representations of the ▇▇▇▇▇▇▇▇▇▇/Arad Group. The
▇▇▇▇▇▇▇▇▇▇/Arad Group represents to the other parties to this Agreement that it
will Beneficially Own approximately 17,318,000 Common Equivalent Shares in the
aggregate immediately following the consummation of the Plan.
Section 3.3. Representations of the Lender Group.
(a) The Chase Manhattan Bank represents to the other parties
to this Agreement that it will Beneficially Own approximately 2,096,291 Common
Equivalent Shares immediately following the consummation of the Plan and that it
does not share Beneficial Ownership of any of those shares with any other member
of the Lender Group.
(b) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated represents to the other
parties to this Agreement that it will Beneficially Own approximately 4,020,592
Common Equivalent Shares immediately following the consummation of the Plan and
that it does not share Beneficial Ownership of any of those shares with any
other member of the Lender Group.
(c) Whippoorwill represents to the other parties to this
Agreement that each Whippoorwill Account will Beneficially Own approximately the
number of shares of Capital Stock set forth on Schedule 1 to this Agreement
immediately following the consummation of the Plan and that none of the
Whippoorwill Accounts shares Beneficial Ownership of any of those shares with
any other member of the Lender Group.
24
ARTICLE IV
MISCELLANEOUS
Section 4.1. Effective Date. This Agreement shall become
effective upon the consummation of the Plan.
Section 4.2. Termination. (a) This Agreement shall terminate:
(i) Upon consent of all of the parties hereto who are then
subject to this Agreement;
(ii) As to the ▇▇▇▇▇▇▇▇▇▇/Arad Group, in the event that
the Investor Group, or any of its Affiliates that have agreed to be
bound by this Agreement, shall cease to be entitled to the election of
any Designee (exclusive of the ▇▇▇▇▇▇▇▇▇ Designee) to the Board
hereunder;
(iii) As to the Lender Group, in the event that the Lender
Group, or any of their Affiliates that have agreed to be bound by this
Agreement, shall cease to be entitled to the election of any Designee
to the Board hereunder and, with respect to any individual Secured
Lender, when the Common Equivalent Shares Beneficially Owned by such
Secured Lender have been less than 10% of the Common Equivalent Shares
Beneficially Owned by such Secured Lender immediately following the
consummation of the Plan for a period of 184 consecutive calendar days;
provided, that this Agreement shall terminate with respect to
Whippoorwill Associates, Incorporated and each Whippoorwill Account
when the Common Equivalent Shares Beneficially Owed by all of them in
the aggregate have totaled less than 10% of all Common Equivalent
25
Shares Beneficially Owed by all of them immediately following the
consummation of the Plan for a period of 184 consecutive calendar days;
and provided further, that the termination of this Agreement with
respect to any Secured Lender shall be deemed to result in a reduction
in the total amount of Common Equivalent Shares Beneficially Owed by
the Plan Secured Lender Group by an amount equal to the amount of
Common Equivalent Shares Beneficially Owned by such Secured Lender at
such time;
(iv) As to the ▇▇▇▇▇▇▇▇▇ Entities, in the event that the
▇▇▇▇▇▇▇▇▇ Entities, or any of their Affiliates that have agreed to be
bound by this Agreement, shall cease to be entitled to the election of
their Designee to the Board hereunder.
(b) In the event that a material violation of any covenant
hereunder by a member of a Stockholder Group that is not cured within thirty
days of written notice thereof by a member of one of the other Stockholder
Groups shall occur and be continuing, the Stockholder Group of the breaching
party shall not be deemed to be the Beneficial Owner of any Capital Stock for
purposes of Board representation under Section 2.2 hereof or committee
representation under Section 2.3 hereof, and shall have no further rights under
this Agreement. Such member and such Stockholder Group shall nonetheless
continue to be deemed to Beneficially Own its Capital Stock for all other
purposes and to be bound to perform its obligations under this Agreement.
Section 4.3. Secretary to Retain Copy. A copy of this
Agreement shall be filed with the Secretary of the Company.
26
Section 4.4. Further Actions. At any time and from time to
time each party agrees, at its or his expense, to take such actions and to
execute and deliver such documents as may be necessary to effectuate the
purposes of this Agreement. Each party hereto will not take any action that
would (x) result in a breach of any covenant or any other obligation of such
party under this Agreement or (y) impede, interfere with or discourage the
transactions contemplated by this Agreement.
Section 4.5. Specific Performance. The parties hereto
acknowledge that failure on any of their parts to comply with the terms of this
Agreement shall cause the other parties hereto immediate and irreparable harm
that cannot be adequately compensated by the remedies at law, and that in the
event of such breach or violation, or threatened breach or violation, the other
parties hereto shall have such provisions of this Agreement specifically
enforced by preliminary and permanent injunctive relief without having to prove
the inadequacy of the available remedies at law or any actual damages and
without posting bond or other security. Any remedy sought or obtained by a party
hereto shall not be considered either exclusive or a waiver of the rights of a
party hereto or any other person to assert any other remedies they have in law
or equity. In any proceeding upon a motion for any such injunctive relief, a
party's ability to answer in damages shall not be a bar, or be interposed as a
defense, to the granting of such injunctive relief. Any rights under this
Section 4.5 may be enforced in any appropriate court in the State of Delaware.
Section 4.6. Entire Agreement. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof, and
27
supersedes all prior and contemporaneous agreements and understandings among the
parties hereto except as herein contained, with any of the terms hereof.
Section 4.7. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered personally against receipt
thereof, or transmitted by telecopier or by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to the Company, to
Toy Biz, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇▇▇▇▇, the Trust, the Foundation, Object Trading or
Zib, to:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy:
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
and
c/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
28
with a copy to:
Stroock & Stroock & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Arad, to:
c/o ▇▇▇ ▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Stroock & Stroock & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
29
if to any of the ▇▇▇▇▇▇▇▇▇ Entities, to:
▇▇▇▇▇▇▇▇▇ Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to The Chase Manhattan Bank, to:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
30
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Whippoorwill Account, to:
Whippoorwill Associates, Incorporated
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice shall be deemed to have been given on the date of
receipt if delivered personally or by overnight courier, the date of
transmission with confirmation back if transmitted by telecopier, or the third
day following posting if transmitted by mail.
Section 4.8. Waivers; Amendment. This Agreement may not be
modified, amended or waived other than by a written instrument executed by the
parties hereto. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
31
of any other breach of such provision or of any breach of any other provision of
this Agreement.
Section 4.9. Binding Effect; Heirs and Successors. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and shall be assignable only to an Affiliate of a party
hereto and, with respect to assignment by Secured Lenders, to any member of the
Plan Secured Lender Group and any Affiliate of such a member, and only if such
Affiliate of a party hereto, member of the Plan Secured Group or Affiliate of a
member of the Plan Secured Lender Group agrees in writing to be bound by this
Agreement. The provisions of this Agreement shall be binding upon and inure to
the benefit of the heirs and successors of the parties hereto.
Section 4.10. No Third Party Beneficiaries. This Agreement
does not create, and shall not be construed as creating, any rights enforceable
by any person not a party to this Agreement (except as provided in Section 4.9).
Section 4.11. Separability. If any provision of this Agreement
shall be adjudicated to be invalid, illegal or unenforceable, such provision
shall be amended to delete therefrom the portion thus adjudicated to be invalid,
illegal or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made, and the balance of this Agreement shall remain in effect.
Section 4.12. Headings. The headings in this Agreement are
solely for convenience of reference and shall be given no effect in the
construction or interpretation of any provision of this Agreement.
32
Section 4.13. Pronouns. Any masculine personal pronoun shall
be considered to mean the corresponding feminine or neuter personal pronoun, as
the context requires.
Section 4.14. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 4.15. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of the conflict of laws thereof.
Section 4.16. No Restriction on Transferability. Nothing in
this Agreement shall restrict the ability of any of the parties to this
Agreement to sell or otherwise transfer any shares of Common Stock, Preferred
Stock or other securities of the Company, nor shall a purchaser or other
transferee of any Capital Stock sold or transferred by a signatory hereto be
subject to any of the obligations created hereby unless such purchaser or
transferee has agreed in writing, for the benefit of all parties to this
Agreement, to be so bound.
Section 4.17. Whippoorwill Obligations Several and Not Joint.
With respect to any obligations hereunder assumed by any Whippoorwill Account,
such obligations shall be several and not joint and shall be limited to the
percentage held by such Whippoorwill Account of the total Common Equivalent
Shares held by all such Whippoorwill Accounts, and no such Whippoorwill Account
shall be liable for any obligation of any other Whippoorwill Account.
33
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
/s/ ▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & CO., L.P.
By: ▇▇▇▇▇▇▇▇▇ Partners, L.P.
By: ▇▇▇▇▇▇▇▇▇ Partners Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇▇▇ FOCUS FUND L.P.
By: ▇▇▇▇▇▇▇▇▇ Partners, L.P.
By: ▇▇▇▇▇▇▇▇▇ Partners Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
By: ▇▇▇▇▇▇▇▇▇ Partners Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
34
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AND ▇▇▇▇ ▇▇▇▇▇▇ AS TRUSTEES
U/T/A/D 12/27/88, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
GRANTOR
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Trustee
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, AS TRUSTEES OF THE
▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
FOUNDATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Trustee
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ T.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Trustee
35
THE ▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ FOUNDATION,
INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
OBJECT TRADING CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
ZIB INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
THE CHASE MANHATTAN BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Directory
36
WHIPPOORWILL ASSOCIATES, INCORPORATED,
as agent of and/or general partner for
the accounts listed on Schedule 1 hereto
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
TOY BIZ, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
37
Schedule 1
Fund/Account Common Shares Preferred Shares Common Share
Equivalents
The President and Fellows of Harvard
College 484,997 551,300 1,057,776
The Rockefeller Foundation 121,546 208,495 338,164
▇▇▇▇ Partners II, L.P. 137,455 234,589 381,183
▇▇▇▇ Partners III, L.P. 317,587 543,269 882,022
▇▇▇▇ Partners IV, L.P. 200,821 342,659 556,830
▇▇▇▇ Offshore Fund Trust 86,108 138,552 230,058
Whippoorwill Profit Sharing Plan 1,890 2,717 4,712
Total 1,350,404 2,021,581 3,450,745